Brown defends UK economic record

Britain is well placed to weather the "first financial crisis of the new global age" thanks to Labour's handling of the economy, Gordon Brown has said.

The prime minister mounted a defence of the government's record in a speech to business leaders in Liverpool.

He said the UK could avoid the worst of the crisis thanks to a flexible labour market and low interest rates.

It comes as former Home Secretary Charles Clarke called on him to improve his performance as PM or quit.

Earlier this week, the Organisation for Economic Co-Operation and Development forecast the economy would fall into recession by the end of the year.

Interest rates

Mr Brown blamed Britain's economic woes on an "unprecedented" coming together of global factors such as rising oil and food prices and the credit crunch.

"We are dealing, I think people will look back and say, with the first financial crisis of the new global age," he told the gathering of North West of England business leaders.

But, he added, "at root our economy is better placed to weather the global storm than it was in the seventies, the eighties and the nineties".

Low interest rates, thanks to Bank of England independence, a flexible labour market, employment levels close to record highs and the continued investment in public services would help Britain "insulate itself" from the worst of the crisis, he added.

"While no government can hope to protect people from the full impact of the global credit crunch or the spiral in commodity prices, I am determined that we use the resources we have to do whatever we can to help families and business through these difficult times."

He said the government would "continue to make the right long-term decisions for our country" such as ending Britain's reliance on fossil fuels, planning reforms and investment in skills and science.

And the "underlying strength" of British business meant the country was well placed to benefit from the expansion of the global economy when the recovery came.

No 'Blairite plot'

Mr Brown, who is travelling to Glasgow to meet Scottish business leaders, did not refer to the attack on his record as prime minister by former Home Secretary Charles Clarke.

In an article for The New Statesman, Mr Clarke warned Labour faced "utter destruction at the next general election" if it continued on its current course.

He stressed that there was no "Blairite plot" against Mr Brown but there was a "deep and widely shared concern" in the party that Labour was heading for "disaster" coupled with a determination "that we will not permit that to happen".

Asked on BBC Radio 4's Today programme what Mr Brown had to do, he said "establish his authority and set a very clear leadership direction".

And he said the government's performance must improve "significantly" or Mr Brown should "stand down as prime minister with honour and have a proper leadership election and address the proper issues".

Asked how long he gave Mr Brown, the former home secretary said: "I think it's a question of months really."

Mr Clarke's comments in this week's New Statesman come after a lukewarm response to the government's package to revive the housing market, including a stamp duty holiday for properties up to £175,000.

In his article, he calls Mr Brown's decision - in his last Budget as chancellor in 2007 - to abolish the 10p rate of income tax "disastrous and unfair".

'Dad's Army

Mr Clarke, seen as a leading Blair supporter, has previously been critical of Mr Brown. In January, he accused Labour of suffering from a "debilitating" lack of direction under him.

His comments were dismissed by schools secretary and close Brown ally Ed Balls, who told GMTV: "It's not the first time Charles has made those kind of comments. I think it's Charles being Charles.

"I don't think that's where the debate will be when we get to the next general election.

And fellow Labour MP and former minister Nigel Griffiths told Today Mr Clarke had failed to come up with any alternative policies.

He said: "This is not the first time that he's gone for the old Dad's Army 'we're all doomed', without coming up with any alternative.

"He sort of lobs a grenade into the party and then backs away. And he did have his chance to come up with alternative policies and he hasn't come up with them."

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